What is typically included in operating costs associated with asset ownership?

Operating costs associated with asset ownership primarily encompass the ongoing expenses necessary to maintain and operate those assets effectively. This includes costs for labor, which is the expense related to the personnel required to manage or maintain the asset, as well as consumables, which are the materials or supplies that are used in the operation of the asset. These costs are essential to ensure that the asset functions efficiently and remains in good working condition.

For instance, if we consider a piece of machinery, operating costs would include wages for the operators, costs of replacement parts, utilities required for operation, and any maintenance supplies necessary for its upkeep. Therefore, recognizing labor and consumables as part of operating costs is important for comprehensive asset management, budgeting, and financial planning.